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    WORLD'S NO. 1 BATTLE TANK PRODUCER TO BE PRIVATIZED

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    MOSCOW, May 30. (RIA Novosti) - Uralvagonzavod, the world's biggest producer of battle tanks, will be privatized in 2006, said Eduard Rossel, governor of Russia's Sverdlovsk region.

    The company will initially be 100% state-owned, but then all shares, save the controlling stake, will be offered to investors, Biznes, a daily, reported today.

    The current state-run Uralvagonzavod, Rossel said, will give way to the Ural Railway Car Holding Company made up of Uraltransmash, which produces self-propelled guns, and mine layers and dispensers, Zavod No 9, towed field guns, and ChTZ-Uraltrak, a civil engineering company.

    Analysts support the privatization of the defense giant.

    "The general idea of the state's economic policy is to get rid of unitary enterprises as a form of ownership, as it gives too much leverage to the director and too little to the state," said Konstantin Makiyenko, the deputy director of the Center for Analysis of Strategies and Technologies, a Moscow-based think tank.

    Moreover, main battle tanks (MBTs) have not brought enough export contracts lately. Makiyenko said he did not rule out large contracts on MBTs with Algeria and India, but said negotiations on these deals were still in progress, and prospects were unclear.

    Experts still hold some reservations about the future privatization of Uralvagonzavod. First, according to Troika-Dialog analyst Gairat Salimov, UVZ is still on the list of strategic enterprises; second, its privatization might lead to the declassification of defense information.

    And Makiyenko cited another reason. "With its current turnover, UVZ might sell for more than a billion dollars. Moreover, Russian oligarchs are more prepared to invest in oil, gas, and telecommunications than engineering," he said.

    Uralvagonzavod, the world's No 1 producer of combat vehicles, makes T-72 and T-90 MBTs and their derivatives. Most of its output is supplied to domestic markets.

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